How To: Fix Your Credit Score Fast

Guides2 years ago
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If you a preparing to apply for a mortgage, loan or credit card, your credit score is likely to play a large factor in whether you are successful, and what the interest rates will be if you are. The score will have a significant impact on many aspects of your life, including your ability to buy a house, get a new car, start up your business and even buy your household goods with a credit card.

Below, we will look at everything you need to know about improving your credit score. We will explore how to check your score, create a Credit Score Boost and Credit Score Good Practices which you should begin implementing in your life.

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What is Your Credit Score?

Your credit score is a number that shows your creditworthiness to anyone you are looking to borrow money from. Your score will range from 300-850, with higher scores representing a better credit standing. You credit score will be based upon several financial factors such as your levels of debt, your repayment history on your credit cards and other debts, the number of open bank accounts you have and various other factors.


How Important Is Your Credit Score?


Why is your credit score important?

Your credit score is a number that shows your creditworthiness to anyone you are looking to borrow money from. Your score will range from 300-850, with higher scores representing a better credit standing. You credit score will be based upon several financial factors such as your levels of debt, your repayment history on your credit cards and other debts, the number of open bank accounts you have and various other factors.


What happens if you have a bad credit score?

If you have a bad credit score, you may find it difficult to secure a loan, mortgage or apply for a credit card. Lenders will not view you as a secure risk, and if they do loan you money, they will do so at a higher interest rate to cover the higher risk they are facing.


Can you recover from a bad credit score?

Fortunately, a low credit score does not have to be permanent. There are various Credit Score Good Practices you can adopt to work towards a Credit Score Boost and putting yourself in a better financial position for the future. We will detail the best ways to Fix Your Credit Score Fast below.


How to Fix Your Credit Score Fast


1. Assess your Current Credit Score: How to Check your Reports

To come up with an effective plan to improve your credit score, you first need a clear idea of your current financial situation. Your first step is to identify which factors are affecting your score negatively so you can target them first.


Credit Score: How to Check and Access your Report

To discover why your credit score is low, you can access free reports from a credit reporting agency. There are three large agencies operating in the US:

· Experian

· TransUnion

· Equifax

You can order a free report from each of them once a year to get a breakdown of how your credit score has been calculated and which factors are responsible for dragging your total number down. You can also use annualcreditreport.com to access all three at once—this may be the best option as you will want to be able to get a clear picture from the information all three provide. Requesting a credit report will not affect your credit rating negatively.

Once you have all three reports, sit down and systematically make your way through them, finding the factors which you need to improve to up your score.


2. Correct Any Out-of-Date Information or Mistakes on your Credit Reports

You should also make sure to check through the reports to spot an out-of-date information or inaccuracies that need correcting. You can contact the credit bureaus to inform them of these mistakes and they will be obligated to correct them promptly. Or you can turn to a Credit Repair Company to handle the issue for you.

This may be one easy step you can take for a Credit Score Boost.


3. Pay Off your Existing Credit Card Balances

One easy step you can take is to pay off your credit card balances if you can afford to. This is the fastest way to up your credit score. Thirty percent (30%) of your credit score is calculated from your current debts and utilization of your credit, so if you can pay these off quickly, you should see a substantial improvement.

Experts recommend that you should aim to keep your credit card utilization rate below 30% so that it does not begin to negatively effect your credit score. You can discover your utilization rate by dividing your current balance by your total credit limit. So, if you have $2,000 in the bank and a credit limit of $10,000, your credit utilization is a healthy 20%.


4. Pay Off Collection Accounts

If you clear your debt collection payments, you will be able to see a rise in your score. So, the quicker you clear your debts, the better. If you can't afford to pay off your debts at the current asking rate, most debt collection agencies will be open to a negotiation. These agencies want to be paid and if you are showing that you are willing to start paying off your debt, they will usually be open to helping facilitate that. Communicating with your debtors and trying to find a way to work it out will only help you from a Credit Score Boost standpoint.



5. Pay your Credit Card Bills on Time

Credit Score Good Practices include quick repayment of debts. If you are slightly disorganized or in the habit of putting off credit card repayments until the last possible moment, you could be hurting your overall credit score. Your repayment history is the most crucial factor in your credit score, and factors for 35%, so if you have this habit, you should aim to correct it promptly.


6. Try to put a stop to any borrowing

If you have a substantial amount of debt already, or have just managed to get yourself debt free, don't harm your credit score further by taking on new debts if you can help it. Be responsible with your credit card use and become more selective and economic with your purchases if you have a habit of overspending.


7. Be careful when applying for new credit

If you have no choice but to apply for credit, you should be careful about which lenders you approach and do your research before you make your application. You should make sure that you are highly likely to qualify for the loan before you apply. Each loan application takes less than 5 points off your score generally, but if you get rejected by several lenders before getting your loan, these points can build up.


8. Take steps to Automate your Payments

One quick and easy way to ensure that you don't default on any of your payments is to set up automatic payments through your bank. That way you won't have to rely upon remembering yourself and can always refer to your banking app to calculate your pending payments for each month and how much you can afford to spend on other things. Automated payments are an effortless way to improve your money management and contribute to a better credit score.


9. Keep your oldest credit card accounts open with a healthy repayment schedule

Maintaining a positive relationship with your credit card provider over a number of years will help to maintain a healthy credit score, so be sure to keep your oldest accounts open and keep your repayments prompt.


10. Deal with your owed back taxes

If the IRS have a lien on your property, your credit score will suffer. So, if you can do so, you should pay off what you owe. If you do not have the funds, you may be eligible for the IRS Fresh Start Program which may allow you to negotiate a repayment schedule or lower the amount you must pay.


Summary - How To Fix Your Credit Score Fast

Fixing your credit score isn't going to be a painless process. The majority of tips we have detailed above are relatively simple to accomplish but will require you to be prudent and responsible with your outgoings and may involve important attitude and lifestyle changes.

Look over our first step - Credit Score How To Check Your Reports to get started and make progress from there by following each step that applies to your situation.

A credit score is a financial score and, as such, there is no way to fix it without paying back what you owe. But if you take the plunge and start taking the above steps for Credit Score Good Practices, even little by little, you will start to see an improvement in your credit score and financial status.

The Best Ways to Improve your Credit Score